PineBridge, Guggenheim in market; Barclays eyes volume drop; CLO secondary spreads mixed

By Cristal Cody

Tupelo, Miss., Nov. 6 – PineBridge Investments LLC tapped the U.S. CLO market with $411.2 million of notes in the Galaxy XXI CLO Ltd./Galaxy XXI CLO LLC deal.

In Europe, Guggenheim Partners Europe Ltd. priced €406.5 million of notes due Nov. 16, 2028 in its first euro-denominated CLO deal via Citigroup Global Markets Inc., according to a market source.

The Cork Street CLO Designated Activity Co. offering included €127.3 million of class A-1A senior secured floating-rate notes (Aaa//AAA); €112.7 million of class A-1B senior secured step-up floating-rate notes (Aaa//AAA); €15.65 million of class A-2A senior secured floating-rate notes (Aa2//AA); €26.35 million of class A-2B senior secured fixed-rate notes (Aa2//AA); €24 million of class B senior secured deferrable fixed-rate notes (A2//A); €21 million of class C senior secured deferrable fixed-rate notes (Baa2//BBB); €26 million of class D senior secured deferrable fixed-rate notes (Ba2//BB) and €53.5 million of subordinated notes.

Final pricing terms were not available by press time.

Oak Hill Advisors (Europe), LLP was in the European market also with the €415.8 million Oak Hill European Credit Partners IV Designated Activity Co. deal via Goldman Sachs & Co. Final pricing terms were not released by press time.

Year to date, 84 managers have priced $86.4 billion of new broadly syndicated CLOs, compared to $104.4 billion from 99 managers in the same period last year, according to a Wells Fargo Securities LLC report on Friday.

Barclays Bank plc analysts said on Friday they estimate $70 billion to $80 billion of new CLO issuance in 2016.

Broadly syndicated CLO volume has dropped off in the second half of the year but is still on pace to exceed $95 billion and within its full-year estimate of $90 billion to $110 billion, according to the Barclays report.

“2016 is the final year in which risk retention is not enforced, and while only a minority of deals issued this year have been explicitly compliant, a plan for eventual compliance has been an increasing focus for CLO investors and managers,” the analysts said. “We expect risk retention to be a minor headwind for issuance as market consolidation continues (only six new managers entered the BSL CLO market this year, versus 18 last year) and top managers identify sustainable, compliant structures.”

A significant volume of 1.5-year non-call structures issued in early 2014 that will come up for refinancing also may dampen issuance in late 2016, Barclays said.

BBB, BB spreads weak

In the secondary market, U.S. CLO spreads have widened toward the bottom of the capital stack, with the BBB and BB tranches trading 40 basis points to 90 bps wider than a month ago, respectively, according to the Wells Fargo Securities note.

CLO BBB-rated notes were quoted wider at Libor plus 475 bps, while BBs were trading at Libor plus 790 bps.

“Higher up in the capital stack, the AAA to single-A tranches have remained fairly flat, at 0-10 bps wider on the month and 5-35 bps tighter since the start of the year,” the Wells Fargo analysts said. “Continuing credit market concerns should keep spreads from meaningful tightening in the near term.”

CLO 3.0 AAA spreads were 8 bps wider on the month at Libor plus 158 bps.

PineBridge prices CLO

In new issuance, PineBridge Investments sold $411.2 million of notes due Jan. 15, 2028 in the Galaxy XXI CLO offering, according to a market source.

The $259 million tranche of class A senior floating-rate notes priced at Libor plus 158 bps.

Barclays was the placement agent.

PineBridge Investments will manage the CLO.

The CLO has a 2.1-year non-call period and 4.1-year reinvestment period.

The deal is collateralized primarily by broadly syndicated first lien senior secured corporate loans.

Proceeds from the offering will be used to purchase about a $400 million portfolio of mostly senior secured leveraged loans.

PineBridge Investments has priced three U.S. CLO transactions and one euro-denominated CLO deal year to date.

The New York City-based asset management firm brought to market two CLO transactions in 2014.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.